Key Insights

• Significant insider control over WuXi Xinje ElectricLtd implies vested interests in company growth
• 58% of the business is held by the top 4 shareholders
• 23% of WuXi Xinje ElectricLtd is held by Institutions

Every investor in WuXi Xinje Electric Co.,Ltd. (SHSE:603416) should be aware of the most powerful shareholder groups. We can see that individual insiders own the lion's share in the company with 63% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Clearly, insiders benefitted the most after the company's market cap rose by CN¥405m last week.

Let's take a closer look to see what the different types of shareholders can tell us about WuXi Xinje ElectricLtd.

What Does The Institutional Ownership Tell Us About WuXi Xinje ElectricLtd?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that WuXi Xinje ElectricLtd does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see WuXi Xinje ElectricLtd's historic earnings and revenue below, but keep in mind there's always more to the story.

WuXi Xinje ElectricLtd is not owned by hedge funds. With a 23% stake, CEO Xin Li is the largest shareholder. With 13% and 12% of the shares outstanding respectively, Jun Yu and Tingli Liu are the second and third largest shareholders. Interestingly, the third-largest shareholder, Tingli Liu is also a Member of Corporate Board, again, indicating strong insider ownership amongst the company's top shareholders.

On looking further, we found that 58% of the shares are owned by the top 4 shareholders. In other words, these shareholders have a meaningful say in the decisions of the company.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There is a little analyst coverage of the stock, but not much. So there is room for it to gain more coverage.

Insider Ownership Of WuXi Xinje ElectricLtd

The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

It seems that insiders own more than half the WuXi Xinje Electric Co.,Ltd. stock. This gives them a lot of power. That means they own CN¥2.8b worth of shares in the CN¥4.5b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public, who are usually individual investors, hold a 14% stake in WuXi Xinje ElectricLtd. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with WuXi Xinje ElectricLtd , and understanding them should be part of your investment process.

If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.